What are your rights if my employer goes bust? We explore this question in this article…
Most of us rely on our wages in order to keep a roof over our heads and take care of our families. 6.05 percent of adults in the UK have absolutely no savings at all to fall back on in an emergency.
Whatever kind of salary you’re earning, many of us find ourselves counting down the days to payday each month, but what happens if your employer becomes insolvent? In some cases, you may need the services of a specialist insolvency solicitor to help you navigate your way through.
In this article, we’ll walk you through what to do if your employer goes into insolvency. Take a look…
What is Business Insolvency?
Insolvency occurs when a business is no longer able to meet its financial obligations; for example, paying bills, paying employee salaries, and making repayments on debts. When a business becomes insolvent, it will often be taken over by administrators who will analyse the situation and figure out whether the company can be sold or go into administration. During this time, all work will stop, and the company’s accounts will be frozen until the administrators have done their job.
What Will Happen to Your Job if Your Employer Goes Insolvent?
For employees, this is, of course, an incredibly worrying time. It’s only natural that your thoughts will immediately turn to what might happen to your job, and what that will mean for you and your family.
If it has been decided that the business will be sold – and a buyer has been found – the new owner of the company may decide to retain the business’s existing employees. In this case, you may be required to reapply for your job and to renegotiate your salary and benefits.
If, however, the business goes into administration, the company will, essentially, cease to exist and all employees will be made redundant – which means that they will no longer have a job.
What about my money?
If your employer becomes insolvent, they will not, in most cases, have enough money to pay you what you are owed in terms of salary and holiday pay. But, don’t panic, as you may not be left out of pocket.
If you have been made redundant due to your employer going bust, the first thing you need to do is to apply for a redundancy payment from the Government’s National Insurance Fund. You can do this online, and you’ll need to have the following to hand when you make your application:
- Your National Insurance number.
- A UK email address.
- Details of the bank or building society that you want your payment to be made into.
- The date you became redundant (if you lost your job) – this can be found on your official letter of redundancy.
- Your employment details, including dates you were employed and how much you were paid.
- Details of any money you’re owed by your employer.
- The number of holiday days you have left.
- Copies of any letters sent to or received from your employer or an employment tribunal.
The government will then make payment to you as follows:
- Unpaid Wages: you can receive up to eight weeks of unpaid wages, with an earnings cap of £525 per week.
- Statutory Notice Pay: you may receive between one and 12 weeks pay if you have worked for the company for a certain number of years.
- Holiday Pay: you may receive payment for any annual leave days which have not been taken.
Unfortunately, you won’t receive government cash for any bonuses or other discretionary payments which you may have been expecting from your employer. In most cases, you can expect to receive your redundancy payment within six weeks of making the claim.
What do I do next?
As mentioned, it’s really important that you make your claim for redundancy pay as soon as possible. You should make sure that all of the information is accurate in order to avoid any delays.
Your next step is to check to see if you are eligible to receive Universal Credit. These are payments made to you by the government each month while you are looking for new employment.
You can apply for Universal Credit online and, once your application has been processed, you will be expected to attend an interview at your nearest Job Centre to complete your application. If you are under the age of 25, you will receive £257.33 per month or £324.84 if you are above the age of 25.
If you are responsible for paying rent and bills on your home, you may also be eligible to receive housing benefits, and you can apply for this within your Universal Credit application. If, however, you are paying a mortgage on your home, you may also be entitled to some financial help while you look for a new job.
Has Your Company Gone Under?
When your employer becomes insolvent, it can be an incredibly stressful time as you try to work out what your rights and entitlements are while seeking new employment. The steps detailed in this article will help you to navigate the sometimes complicated world of redundancy. However, in more complex cases, it’s a good idea to seek the services of a specialist insolvency solicitor to help make sure that you get everything that you are owed by your employer.
Please be advised that this article is for general informational purposes only, and should not be used as a substitute for advice from a trained legal professional. Be sure to consult a legal professional if you’re seeking advice about your employer going insolvent. We are not liable for risks or issues associated with using or acting upon the information on this site.